Proposed ‘Zimbabwe Rescue Plan’ by economist Dr Tapiwa Mashakada

Last updated Feb 5, 2020 32,820

By Dr Tapiwa Mashakada

Has the Zimbabwean economy imploded as yet? Or how many times should it implode? With an annual inflation rate of 600% and a projected negative growth rate of 10% in 2020, a looming food and humanitarian crisis, Zimbabwe is imploding.

Dr Tapiwa Mashakada

Zimbabwe Poverty indices are the highest in SADC. High cost of utilities especially electricity charges have gone out control. Fuel is out of reach and industry is grinding to a halt. For me this is real implosion.

The real economy has long been decimated and what we are dealing with are remnants of the once vibrant economy which used to be the bread basket of Africa with a strong currency stronger than the USD in 1980.

Yet despite our economic malaise, we still have a huge potential of exponential growth if we do the right things. We are the most educated country in Africa and proud owners of vast mineral wealth and natural resources.

Above all, the educated youth bulge is a demographic dividend. Despite the closure of democratic space and the trampling of people’s freedoms and rights, our country can rise again if we all put the country first.

Understanding the problem is fine but let us focus more on solutions. In terms of alternative solutions we propose the following:

1. Political, Governance Institutional and Economic reforms to create a conducive environment leading to peace,stability, confidence and economic growth. Zanu PF and ED must show leadership and magnanimity. They must take responsibility for failing to run government and causing the economic free fall to date. It is in the interest of the country for ED to unite and galvanize the nation.

It is now common cause that. Adv Nelson Chamisa, the MDC President garnered 2. 6 million votes in the 2018 elections and he carries this mass base and support with him. He cannot be ignored in the governance and leadership equation of the country. That will be equivalent to committing the Ostrich’s offence. So the issue of Legitimacy should be addressed through an honest national dialogue.

2. Domestic and foreign investment is required because growth is constrained by capital deficiencies. The private sector desperately needs lines of credit. Let us remove all barriers.

3. Harnessing and mobilizing domestic sources of revenue is key. The low hanging fruit is Tourism which has the potential to raise usd 1 billion in receipts per annum. The next low hanging fruit is beneficiation and value addition of raw materials and minerals which has the potential to raise usd 10 billion per annum. The third low hanging fruit is fighting corruption which has the potential to recover and lock-in usd 20 billion per annum.

4. Policy consistency can assist in building confidence

5. Addressing the currency and exchange rate conundrum should be given key priority simultenous with the building of foreign currency reserves at the Reserve Bank. For purposes of macroeconomic stability Zimbabwe needs a stable currency which is a store of value.

For as long as we do not produce the Zim dollar will remain a destabilizing force in the economy. The alternative is to redollarize for a time bound period in order to stabilize prices. After all the economy has since self dollarized.

6. The Diaspora should be offered financial and economic incentives so they can institutionalize their remittances.

7. The budget deficit must always be kept under lock and key. There is a temptation under sovereign currencies to print money for seigniorage revenue. The Monetary Policy Committee must vaccinate itself against the monetization of the deficit and abuse of the central bank overdraft.

8. The Central bank must be given monetary policy independence but should guard itself against quasi-fiscal operations which are slowly creeping in.

9. Parastatal reforms are difficult to implement. I think there should be established a Parastatals Reform Commission to replace SERA which is arguably failing to usher reforms and instil financial discipline and good corporate governance.

10. Dealing with the public service and Social Sectors which are burning. Zimbabwe has to deal with a deep humanitarian crisis in the urban areas in regard to the quality of Healthcare services. Hospitals have no drugs or equipment. Medical personnel is demoralized and hospitals are now death chambers.

11. An urgent Zimbabwe Conference is required to raise new Capital to strengthen the budget and attract official development assistance.

12. Zimbabwe should engage the Paris Club for consideration under the Highly Indebted Poor Countries (HIPIC). This is a practical plan to deal with arrears and debt. Zim has no capacity to service its debts.

13. Pro-poor policies and social safety nets are necessary to protect the vulnerable social base. Austerity has never succeeded in Africa because it is not a developmental strategy. Austerity is not human-centred. It is inspired by the discredited neo-liberal Washington Consensus. It is not progressive.

14. Drought mitigation should be implemented in a non-partisan manner. Throughout the country’s 10 provinces food aid is being distributed on party lines. Food is used as a political weapon. Why are development agencies not seeing this ploy?

15. Zimbabwe must invest in its infrastructure. This sector has potential to create jobs. Investment in renewable energy should be prioritized.

16. Restoration of Agriculture and the rural economy is key to the recovery of this Agro-based economy. Zim must work out a viable pricing policy for Agricultural products and ratchet up new markets. Innovation and mechanization will be boosted by irrigation.

17. The country should preserve peace and stability at all times and threat and menace of Mashurugwis should be confronted.

18. Local government is a key arm of Government. In this regard devolution must happen now. Development of communities and service delivery can be facilitated through devolution.

19. Priority should be given to water and sanitation hygiene (Wash) in urban and rural areas.

20. The Beitbridge-Harare-Chirundu highway is of national strategic importance. This highway carries 90% of Zimbabwean trade. The road forms a greater part of the North-South Corridor and is important under the African Continental Free Trade Area (AfCFTA).

Conclusion

We urge all Zimbabweans at home and in the Diaspora to consider and examine our alternative working proposals in the form of the “The Zimbabwe We Want: 20 Point Plan”.

By the grace of God, Zimbabwe can be saved.

Dr Tapiwa Mashakada is the opposition Movement for Democratic Change (MDC) MP for Hatfield and a Chief Economic, Trade and Investment Facilitation Expert. He was the Minister for Planning and Investment in the coalition government of Zimbabwe between 2009-2013.